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Tuesday, December 19, 2006

Guayaquil and the Microenterprises

This is the entry that has taken the longest to write. Not just because of the number of photos, which are many, nor for the amount of text, which will be long...but rather for the amount of information, memories, and the gravity of what we saw and experienced. I want to strike a good balance here, with the proper tone, while still giving the contextual picture of our experience. Hopefully, as we´ve gone along on our travels, relating some stories and photos here, you´ve noticed the banner on the right for Kiva. It´s not there by accident, nor is it some intrusive advertising, but it´s there by choice. We put it there. For years I´ve been intrigued by microfinance and hoped to someday be able to participate, as a financier, as a lender, as a facilitator...in some fashion. Before I ramble on any further, you can click here for a more thorough explanation of microfinance.

In early 2006 I heard a piece on NPR that highlighted Kiva, a non-profit organization that allows anyone with internet access and as little as $25 a chance to participate in micro-lending. I immediately signed up and was delighted to be able to put some funds that would otherwise be diverted to a savings account directly into the hands of entrepreneurs, in developing countries around the world. More recently, an episode of Frontline on PBS highlighted Uganda and the success of a microenterprise that I was lucky enough to have lent to, directly through Kiva. Click here to go to that page and see the show.

So! With all that explained, Susan and I traveled to Guayaquil specifically to be able to visit some of the people and their businesses that we´ve lent money to already.

Mifex is a microlending business that operates in Guayaquil, and they use Kiva as their funding source. Although it´s certainly not part of their job or responsibilites, we were very pleased when Robert Edgar, the Director of Operations, corresponded with us before we arrived and offered to take us on a tour of their operations. So! After a couple of phone calls on Saturday morning, he picked us up, along with Luis Crespo (whose business card says General Manager...but I´d say CEO!) and Esther Vasquez, a loan officer.

They took us to their two offices, which are pictured below. Now, the microlending we knew about...but what surprised us as well was that they also provided vocational training. Volunteers come into the offices and hold classes in various subjects, all of which cost the students just $1 per class. While we were there, two women were learning how to apply acrylic nails with appliques...both of which will be positioned to receive their own loans, once their training is complete. The middle picture shows their bulletin board, which lists some of the trades that people can learn. For more information and Mifex´s website, click here.

When we first made plans to visit Guayaquil and contacted Robert (the man talking with Susan in the picture on the right), we were hoping just for the addresses of some of the businesses, so we could visit on our own. His very polite reply was that it might be a little dangerous, as they weren´t in the best parts of town...perhaps he could meet us and take us there. If I recall correctly, he also mentioned that it would be hard to find them, since there weren´t addresses, as such, that we could use. We didn´t decline, of course, but still thought that we´d be ok on our own.

As the three of them took us for a ride, we crossed a river and came upon this view:

It looks beautiful, doesn´t it? They went on to explain that with so many people coming to Guayaquil, looking for work, not just from other, more rural parts of Ecuador, but also from Peru and Colombia, that there simply isn´t room for them all. As many as two million people live in what Luis called ´the poverty belt´that wraps all around the city. I hate to call them slums...perhaps shanty-towns might be more appropriate. These homes along the water are built by squatters and have no services: no water, no sewer, no electric and no trash services.

We next moved to another neighborhood, which on the map looks just like the picture above. No street names, just the name of the neighborhood. They explained that they were entire towns that were only semi-official. The city doesn´t want to recognize them...only informally. Typically, these neighborhoods have only one paved road that runs through them, for the buses to use, and the rest are dirt.

These are the neighborhoods in which Mifex operates. Not with the extreme poor, that are homeless, but with people that are on their way up, economically speaking. Without going too far off subject, they have a rating system that they use to rate the poverty level...which also factors into their underwriting system. Mifex is very stringent in their requirements, and only funds around 30% of the applicants...but they have a 100% repayment rate thus far.

Here is a short clip of us driving through the neighborhood, below. The roads are rough, so it´s a little bumpy on the video, too.

While driving around we got to see some gang members hanging out on the corners. This was a good reason for us not going here alone, that´s for sure. The Mifex loan officers have to deal with them on a regular basis, hiding their digital cameras and other valuables, paying a ´tax´to pass through of $.10-.15 each time. One loan officer recently discovered that they literally had no money on them...and got pistol-whipped as a lesson.

The first business we visited was that of Ervin Lino, who is pictured on the right, along with his mother. They operate a business called ´Picanteria Tres Hermanos.´ In the middle picture below you can see (from the left) his father, followed by Ervin, a cousin, the second brother, his mother and finally the third brother.

The whole family is involved in the operation. Ervin´s father runs a natural juice stand out in front, which we found to be quite delicious, too. I got a chance to try the specialty of the house, literally the last bowl left, even though we were there in the morning. While we visited (and I ate), Ervin discussed his plans for his next loan: a truck which will allow him to buy larger quantities of fresh fish and other supplies. In addition to the two businesses here at this location, the family also has started a little store just down the street, on the corner, where they sell dry goods. The truck will come in pretty handy, I´ll bet!

In the picture on the left, you can see Luis Crespo on the left and Robert Edgar on the right side of the Jeep. On the right, Ester Vasquez is busy talking while I´m sampling the best encebollado I´ve had yet! It´s no wonder that his business is thriving! ¡Que Sabroso!

The next business we visited was that of Teodoro Burgos. He´s the man in red in the picture below:Teodoro runs his mechanic´s shop in a small neighborhood where he has clients, and he also has a contract to do repair work for Dole, which has a large presence in Ecuador. Bananas are big business around Guayaquil! He proudly showed us his operations and his staff, taking a break from his day. They had been working when we arrived, and we could not only see their current projects, but also smell the paint that was yet to dry.

The pictures are of Teodoro and his staff in the left and center picture, and the street entrance on the right.

As if all of that wasn´t enough, Luis was kind enough to invite us to dinner with the entire Mifex staff. As it turns out, it was to celebrate their first year in business! Although I could understand only about half of what was said, each person shared how pleased they were with their first year, that while it wasn´t easy at all, they were proud of the progress they´d made and how grateful they were to be a part of this organization. We were quite impressed as well, and look forward to being partners with Mifex for years to come.

I won´t share any more news that we learned that night, but suffice it to say that they have many more plans in the works; bigger and better things to come! As Luis put it, we were the first to visit their enterprise and we get to see them in diapers...but they have big pants! They have a lot of plans and it certainly looks like they´re well on the road to completing them. Each person involved has far more experience than is required for their current position, far overqualified. They are working on a project that is larger than all of them combined, one that has a substantial impact on the neighborhoods and on the individual businesses.

To Luis, Esther, Robert, and the rest of the Mifex staff, we thank you sincerely for a wonderful experience -- certainly a highlight of our trip!

Thank you for reading through such a long post, too! Maybe you can now understand why it took so long to be able to sit down and put all of this together. Coincidentally, I did have a chance to just check my email the morning after our visits, and there in my inbox were two emails from Kiva: Ervin and Teodoro´s latest payments had just been posted. It´s working!

-Tom and Susan

PS. If you´d like to fund one of Mifex´s loans to businesses in Guayaquil yourself (by clicking here)...you might have to be patient. They have many loans waiting to be posted, but they have to wait their turn...and their loans are for smaller amounts than some, so they tend to be filled very quickly! I just looked, and while there were some when I started typing, there is only one left!

How encouraging to read of your visit to Ecuador and about your Kiva borrowers. Maybe one day, I too will be able to visit some of the people from my Kiva portfolio. Kiva provides a terrific opportunity to connect with people from around the world and seeing how your contribution can make a difference.

Tom, I followed in your footsteps and visited 3 borrowers my wife and I have helped via Kiva and Mifex. I was in Ecuador building houses for Habitat for Humanity so at the end of my mission I stayed a few days longer. Robert and Luis were more than happy to take me on the tour. This was a life changing experience for me.